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Welcome to The Foreign Exchange Clearing House

“Life is really simple, but we insist on making it complicated.” ― Confucius

FXCH is a new approach to Spot-FX clearing. Our settlement technology is remarkable in its simplicity. Our goal is simple: cut out superfluous steps in the trade clearing process, thereby leaving out unnecessary associated costs.

Tendermint Blockchain Partners

Spot-FX central clearing, multiple venues

Why FXCH?

We believe that the current market structure in FX is archaic, expensive and ripe for a paradigm shift. Previous attempts to remove risk and lower costs from FX settlement have focused on partial workarounds. FXCH uses technology to obtain the level of trust needed to handle settlement of FX in any amount and eliminate unnecessary steps and costs.

Open for Business

Access to the FX Markets has been choked in the past few years due to cost of credit and banks “exclusive right” to participate. FXCH is open to all qualifying institutions.

Secure / Transparent

Users collateral is held in trust at our custodian bank. Limits are communicated to e-FX platforms in real time. Members and Users can access the distributed ledger and control their cash.

Cost efficient

At maturity, settlements are effected electronically on-Ledger without a need to move or transfer cash.

Open for Business

Access to the FX Markets has been choked in the past few years due to cost of credit and banks “exclusive right” to participate. FXCH is open to all qualifying institutions.

Secure/Transparent

Users collateral is held in trust at our custodian bank. Limits are communicated toe-FX platforms in real time. Members and Users can access the distributed ledgerand control their cash.

Cost Efficient

At maturity, settlements are effected electronically on-Ledger without a need to move or transfer cash.

How it works

Blockchain is a transaction database based on a distributed cryptographic ledger that is shared with all the nodes in a system.

Proof of Ownership

Users (or their agent) transfer collateral to the Clearing House. FXCH records cash on a distributed ledger accessible to all participants, in effect creating a digital proof of ownership. With their digital public and private key signatures, Users see/control their balances in real time. They can reconcile the total balances on the ledger with the publicly available statement of the Deposit Bank. As FXCH does not hold any position, its settlement cash ledger entries are always zero sum.

STP and Confirmations

STP enables the entire trading process to be conducted electronically without the need of manual intervention. It eliminates any conflict of interest between the parties and reduces the execution time. When a User or Member trades on an FX venue, the e-FX platform sends an STP message to FXCH. Once both sides of a trade get confirmed to FXCH, novation can occur.

Blockchain Clearing

On Value Date, maturing contracts generate settlement entries on the distributed ledger. The affected Users can see the result on their copy of the ledger in real time. When trades mature, FXCH effects a double accounting entry on the ledger with the Net currency positions to settle. The combination of novating FX trades to the Clearing House and effecting dematerialised Ledger-based settlements simplifies and dramatically cuts FX clearing costs.

Risk & Collateral Management

FXCH operates a classic real time risk monitoring of all accounts and “reserves” the relevant amount of digital collateral to secure FX positions, adjusting it automatically. Mitigation of default risk is achieved by the contribution of new equity investors to a guarantee fund (subordinated loan) and automatic liquidation for under-margined accounts.

Technology

Open Source Code

Free API to distributed Ledger

10 years+ maturity

Membership

How to participate

There are three types of options for participation in FXCH, depending on the size, volume and price sensitivity of your institution. Direct members need to contribute to the Guarantee Fund with either a deposit or higher fees. Additionally, individual Clients may open an account with a Member and internally negotiate their account parameters.

General Clearing Member

The General Clearing Member (GCM) needs to contribute a minimum of $5M to the Guarantee Fund. The contribution remains his property but represents a capital buffer in case of an account or another member default. The GCM can offer to its Clients segregation of collateral at the Clearing House level.

Individual Clearing Member

The Individual Clearing Member (ICM) either contributes a minimum of $1M to the Guarantee Fund, or pays higher fees that will in part accrue to the GF. A higher margin requirement is associated to the non-contributing ICM’s.

Client of Member

The Client of a Member is only subjected to margin collateral requirement, with a minimum at the discretion of the Member agent. In case an account opts for the “higher security” margin requirement, a fee discount is applied to the account.

Rules

As our unique Blockchain clearing settlement illustrates, we are open to new and great ideas. FXCH is collaborative and community oriented. We invite all members to actively take part in the development of this service and have their say.